You know the old phrase, “spending money like drunken sailors?”
That describes perfectly the borrow and spend culture of the past decade.
Well, now the drunken sailors are coming home to roost, or more appropriately, people borrowing money beyond their means and financial institutions lending money to drunken sailors to spend like drunken sailors and a housing market that’s about as stable as a straw hut in a Category 4 hurricane caused the current subprime mortgage crisis or as I fondly call it, the Economic Clusterfuck of 2008.
Greedy banks, now free to lend money to anyone thanks to a weakening of regulations in the late 1990s, did just that.
Low interest rates make it easier to get credit and flushed with cash, people bought bigger houses, cars and spent money on that cool plasma screen TV. You know. The one you had to have.
But the housing market that homeowners thought would increase in a boom eight years ago began taking a sharp downturn around 2005. Suddenly, homeowners with adjustable rate mortgages who wanted to refinance their homes, now couldn’t because the value of their homes decreased as rapidly as the Seattle Mariners’ chances of winning the World Series.
Compounding the problem was a housing market oversaturated with homes from a building boom that happened at the turn of the century. Housing prices plummeted, homeowners defaulted on their loans and properties were foreclosed.
Wait. It gets better.
Investors purchasing mortgage-based securities now found their investments drying up. The banks that bought and sold these securities couldn’t sell them.
As a result of this nut-filled shitlog of an economic crisis, prestigious financial firms collapsed.
The Federal Housing Finance Authority placed Fannie Mae and Freddie Mac, two of the largest lending institutions in the United States, under conservatorship, and the $12 trillion in mortgages they have.
The Federal Reserve Bank bailed out the American International Group, Inc. to the tune of $85 billion, in exchange for 79 percent of equity stake.
Refusing the government’s bailout, Lehman Brothers filed Chapter 11 bankruptcy protection.
Washington Mutual declared bankruptcy, prompting the U.S. Office of Thrift Supervision to seize the bank and sell most of its assets to JP Morgan Chase.
President Bush’s bailout plan would have the federal government pony up $700 billion to purchase so-called “toxic assets” that are clogging the pipes of America’s economy, like a disgusting gunk-covered hairy thing. The president’s proposal would be like drain cleaner, purging the gross stuff and allowing the economy to flow unobstructed once again.
Yes, I used a plumbing metaphor to describe the bailout plan.
Fears that the government would control your credit card debt, your mortgage and your car payments is enough to scare anyone. Would it mean you’d be beholden to the government is a socialist fiefdom-serfdom situation?
White House spokesmodel Dana Perino said we’re facing a “once-in-a-century crisis.”
That’s a relief, because as far as crises go, I’d rather experience one every 100 years.
“Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And, ultimately, our country could experience a long and painful recession,” President Bush said this week.
A dire forecast, to be sure. Who could help us solve this problem? Is there at least one man who could turn this mess around and get the gears of Wall Street turning again?
Wait! What's that on the horizon? Limping towards Washington with determination and grit?
It's... Senator John McCain!
McCain suspended his campaign this week to use his superpowers to avert the impending economic crisis. Thank God for John McCain. Is there nothing a maverick POW with a war fixation can’t accomplish? When he gets done solving America’s financial morass, maybe he can work on that peace in the Middle East thing they’ve been tinkering with for the last 50 years.
Economically, this country is fucked. We’re so fucked. We’re as fucked as Jennifer Connelly was during the final scene of Requiem for a Dream; a dildo-grinding, sodomizing, degradation, except in the movie the drunk guys were throwing money at her instead of taking money from her.
Some think this bailout plan is a covert way of infusing socialism in our lives, with Big Brother controlling us, this time by the pocket book.
Treasury Secretary Hank Paulson’s plan will give him control with little oversight, making him responsible, but not accountable:
Section 8. Review: Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
Carte blanche to do anything he wants with no review. I think I chose the wrong career path as a journalist.
Some Republicans and Democrats aren’t tolerating the bailout plan and thus the wrangling begins. This crisis will be with us for some time, and I look forward to the day when it will be over. Of course by then, mankind will dwell in the undercity scavenging sewer rats for food and cobbling together old copies of Us Weekly to use as currency.